Global business expansion and transformation attributable to technological advances has escalated the competition among governments to attract research investments through the use of tax subsidies. The historic focus of incentives towards front-end expenditures has now evolved towards the use of income based incentives such as patent box regimes. Depending on the terms and operation of each specific incentive, varying financial reporting impacts may occur.

Financial reporting considerations are similarly being given increased attention by policy makers in the design of tax law incentives throughout the world. It is more important than ever for companies to understand, and continually assess, the financial accounting for credits and incentives to ensure timely identification, reporting and disclosure of such benefits.